Go to Jeff Salisbury LWGate Home Page.From: "Duke Miller" <dukemill@tampabay.rr.com>
Subject: RE: [CANSLIM] Re. Earnings
Date: Thu, 18 Apr 2002 22:08:35 -0400
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I'll second that. Printer's running as I speak!
thanks
duke
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Katherine Malm
Sent: Thursday, April 18, 2002 11:21 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Re. Earnings
Nice article, jans, and a good one to add to the CANLSIM binder, thanks.
Katherine
- ----- Original Message -----
From: Spencer48@aol.com
To: canslim@lists.xmission.com
Sent: Thursday, April 18, 2002 10:06 AM
Subject: [CANSLIM] Re. Earnings
People:
I'm not sure who asked about the "validity" of earnings, but I just
read
an article on earnings (by the OnLine Investor) that might prove
helpful.
jans
"Earnings:
Look A Little Deeper
April 12, 2002 - Earnings for a company can come from various sources.
However, there are three ways that really count: operating earnings,
cost
cutting or a combination of the two. This earnings season, which will be
watched more closely than any in recent history, make sure you look
behind
the headline number to find out how the earnings were made.
A company can announce some great earnings, but the stock can still go
down.
Usually that's because those earnings came from a one time event called
an
extraordinary item. While the company will announce those earnings, most
reporting services don't publish that number. Rather they give the
operating
earnings. Those are the earnings the company produced from the ongoing
business, not from sales of assets or subsidiaries. Another reason for a
dip
in the stock in spite of better earnings: the company will give a poor
outlook, suggesting that earnings won't be improving.
The ongoing earnings are the ones you want to focus on this quarter (and
in
the future). And, just as important, you want to look at revenues as
well. If
you only have earnings increasing without a revenue increase it means
the
earnings are coming from cost cutting. That's fine for a while, but
earnings
can't continue to grow if they only come from cost cutting. There is an
absolute limit to how much a company can cut costs before it hurts
rather
than helps the enterprise.
What you would ideally like to see: an increase in revenues and an even
better increase, in terms of percentages, in earnings. For example, if
you
saw a company that reported an increase of 5% in revenues and an
increase of
10% in operating earnings (with no extraordinary items), you would know
that
sales are increasing and the company is getting more efficient as it
grows.
That's the powerful one-two punch that growth investors want to see:
growth
in sales with better growth in earnings. It means that as the company
gets
larger, it will also get more profitable. At some point, that stops, but
good
growth companies can go on like that for years.
There will be a lot of earnings coming out in the next three weeks.
There
will be lots of buzz, anguish and some pleasant surprises. When you
start
looking at your companies, make sure you look a little deeper than just
the
announced number. If you can see better revenues along with even
stronger
earnings, then your company is doing something that most others can't in
this
economy. That should make it a very worthwhile company to own.
- -Ted Allrich"
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<DIV><SPAN class=3D343190802-19042002><FONT face=3DArial>I'll second =
that. =20
Printer's running as I speak!</FONT></SPAN></DIV>
<DIV><SPAN class=3D343190802-19042002><FONT =
face=3DArial></FONT></SPAN> </DIV>
<DIV><SPAN class=3D343190802-19042002><FONT =
face=3DArial>thanks</FONT></SPAN></DIV>
<DIV><SPAN class=3D343190802-19042002><FONT =
face=3DArial></FONT></SPAN> </DIV>
<DIV><SPAN class=3D343190802-19042002><FONT =
face=3DArial>duke</FONT></SPAN></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<DIV></DIV>
<DIV class=3DOutlookMessageHeader lang=3Den-us dir=3Dltr =
align=3Dleft><FONT=20
face=3DTahoma size=3D2>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com]=20
<B>On Behalf Of </B>Katherine Malm<BR><B>Sent:</B> Thursday, April 18, =
2002=20
11:21 AM<BR><B>To:</B> canslim@lists.xmission.com<BR><B>Subject:</B> =
Re:=20
[CANSLIM] Re. Earnings<BR><BR></FONT></DIV>
<DIV>Nice article, jans, and a good one to add to the CANLSIM =
binder,=20
thanks.</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3DSpencer48@aol.com=20
href=3D"mailto:Spencer48@aol.com">Spencer48@aol.com</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, April 18, =
2002 10:06=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Re. =
Earnings</DIV>
<DIV><BR></DIV>People:<BR><BR> I'm not sure =
who=20
asked about the "validity" of earnings, but I just read <BR>an =
article on=20
earnings (by the OnLine Investor) that might prove helpful. =20
<BR>jans <BR><BR>"Earnings:<BR>Look A Little Deeper<BR>April =
12, 2002=20
- Earnings for a company can come from various sources. <BR>However, =
there=20
are three ways that really count: operating earnings, cost =
<BR>cutting or a=20
combination of the two. This earnings season, which will be =
<BR>watched more=20
closely than any in recent history, make sure you look behind =
<BR>the=20
headline number to find out how the earnings were made.<BR><BR>A =
company can=20
announce some great earnings, but the stock can still go down. =
<BR>Usually=20
that's because those earnings came from a one time event called an=20
<BR>extraordinary item. While the company will announce those =
earnings, most=20
<BR>reporting services don't publish that number. Rather they give =
the=20
operating <BR>earnings. Those are the earnings the company produced =
from the=20
ongoing <BR>business, not from sales of assets or subsidiaries. =
Another=20
reason for a dip <BR>in the stock in spite of better earnings: the =
company=20
will give a poor <BR>outlook, suggesting that earnings won't be=20
improving.<BR><BR>The ongoing earnings are the ones you want to =
focus on=20
this quarter (and in <BR>the future). And, just as important, you =
want to=20
look at revenues as well. If <BR>you only have earnings increasing =
without a=20
revenue increase it means the <BR>earnings are coming from cost =
cutting.=20
That's fine for a while, but earnings <BR>can't continue to grow if =
they=20
only come from cost cutting. There is an <BR>absolute limit to how =
much a=20
company can cut costs before it hurts rather <BR>than helps the=20
enterprise.<BR><BR>What you would ideally like to see: an increase =
in=20
revenues and an even <BR>better increase, in terms of percentages, =
in=20
earnings. For example, if you <BR>saw a company that reported an =
increase of=20
5% in revenues and an increase of <BR>10% in operating earnings =
(with no=20
extraordinary items), you would know that <BR>sales are increasing =
and the=20
company is getting more efficient as it grows. <BR>That's the =
powerful=20
one-two punch that growth investors want to see: growth <BR>in sales =
with=20
better growth in earnings. It means that as the company gets =
<BR>larger, it=20
will also get more profitable. At some point, that stops, but good=20
<BR>growth companies can go on like that for years.<BR><BR>There =
will be a=20
lot of earnings coming out in the next three weeks. There <BR>will =
be lots=20
of buzz, anguish and some pleasant surprises. When you start =
<BR>looking at=20
your companies, make sure you look a little deeper than just the=20
<BR>announced number. If you can see better revenues along with even =
stronger <BR>earnings, then your company is doing something that =
most others=20
can't in this <BR>economy. That should make it a very worthwhile =
company to=20
own.<BR><BR>-Ted Allrich"</BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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